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Sellafield plans to put £1billion of work West Cumbria's way

SELLAFIELD has said it plans to put £1billion of work to West Cumbrian businesses over the next five years.

But when the government’s Public Accounts Committee met in public on Monday to examine the costs of running the nuclear site, it also emerged that some key contracts come with substantial risks.

Sellafield Ltd deputy managing director George Beveridge spoke of “unknowns” – old plants which made it difficult to pass on financial risks to supply chain companies.

Due to the uncertainty in assessing risks and potential technical solutions, Sellafield Ltd is reimbursed by the Nuclear Decommissioning Authority for all allowable costs “with very limited risk sharing”.

The Department of Energy and Climate Change (DECC) will soon publish a nuclear supply chain action plan detailing opportunities in both decommissioning and new-build, both in the UK and worldwide.

Mark Higson, of DECC, told Monday’s hearing it was important for companies to be able to meet nuclear standards and to feel confident about making investments. “There’s no point employing companies who are not up to it,” he said.

Yesterday, the NDA said: “Working with local government and Britain’s Energy Coast, we are developing a framework to better measure the impact the industry has on the West Cumbrian economy. This will provide us with a benchmark against which to measure future performance as we work together to implement the Economic Blueprint, progress Sellafield decommissioning and look for future business opportunities.

“Sellafield already has a significant positive impact on the West Cumbrian economy and the local supply chain, and it’s important this is maximised.”

At present, West Cumbrian firms get 34 per cent of Sellafield business – and the figure is rising.

The National Audit Office Managing Risk Reduction at Sellafield report referred to “gaps in the capability of sub-contractors in the supply chain to undertake work to the standards required for nuclear installations”. One example was Evaporator D, where £50 million of the project’s £244 million cost rise was blamed on the sub-contractor lacking experience in welding to the necessary quality standards.

However, NDA and Sellafield Ltd were now working to develop its procurement strategy “and identify how to build up the supply chain to meet the needs of the site”.

The report points out: “There are gaps in the capacity of subcontractors to undertake the required work. The supply chain lacks capacity to take on cost risks in complex projects.

“This means that Sellafield Ltd often uses cost reimbursement contracts with its supply chain. The Authority (NDA) is working with Sellafield Ltd to strengthen its procurement strategies and long-term plans to help develop supply chain capabilities.

“There has been a long-standing problem (which existed before the Authority was created in 2005) of the site operator starting construction before design risks had been sufficiently addressed. For example, the site operator spent £400 million between 1994 and 2002 and a further £128 million between 2006 and 2008 on building a plant to treat waste from a legacy facility.

“It subsequently found the design could not deal with the waste safely. More recently after appointing Nuclear Management Partners Ltd in 2008 the Authority gave approval for the construction of Evaporator D to start in 2009 before design issues were resolved, which contributed to cost escalation and delays."

See The Whitehaven News for in-depth coverage of the Public Accounts Committee meeting

Have your say

No doubt the contracts signed with Nuclear Management Partners from 2008 let them take any profit and walk away from any cost over runs....the Sella graveytrain will run forever...just make sure you or your family get on board!

Posted by Dave Siddall on
5 December 2012 at 20:33

So our businesses are awash with cash, locals are spending in Whitehaven like there is no tomorrow, revenues from business rates are soaring and the council is pouring money into enhancing local services and smartening up the town. Emmmm.....now somebody isn't telling the whole truth